Cyprus Bailout NegotiationThere has been a big negative reaction to the Cyprus bailout deal – but why? Well, there are a number of big problems here from a negotiating perspective;

1) There was no warning before the EU attempted to foist a bank raid on the citizens of Cyprus. If you are going to push someone around in a negotiation then it’s important to give a signal first. If you just spring it on them as a surprise then you create a lot of resentment, as the EU has discovered, because the discomfort is compounded by the fact that it was unexpected.

2) People in a negotiation are always more concerned with potential losses of things they already have, than opportunities to gain more. So, take away their deposits and you can expect howls of protest.

3) If you show you can’t be trusted people will be very wary of dealing with you. This scenario shows that the EU will contemplate forcing ordinary citizens to take the rap for the failings of their Banks. At a time when the EU most needs to build reassurance in its institutions and its currency, It has instead showed that it cannot be trusted with your money.

Investors and ordinary citizens in other countries will take note…